| But how can we find out whether the U.S. economy has too much, too little, or the right amount of frictional unemployment? |
| We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated for each period. |
| If there is an inefficient excess of frictional unemployment, it should be reduced by policies that change search behavior and improve the effectiveness of job markets. |
| Certainly, reallocation of labour could not occur with no frictional unemployment. |
| There is likely to be some frictional unemployment even when there is technically full employment, because most people change jobs from time to time. |
| In the short term, the reallocation of workers between the various sectors may take some time, increasing frictional unemployment. |
